© GM / Wieck
GMโ€™s OnStar telematics service came under fire after a change that would have allowed it to collect data even from nonsubscribers.
In a sudden reversal, General Motors' OnStar subsidiary has backed down on plans to keep monitoring customers even when they choose to unsubscribe from the in-car telematics service. But the service will still maintain the right to track active customers.

OnStar, with 6 million subscribers, had come under withering attack in recent days from customers, privacy advocates and federal lawmakers over what Sen. Charles Schumer, D-N.Y., described as "one of the most brazen invasions of privacy in recent memory."

Before OnStar backed down, Schumer was calling for a Federal Trade Commission investigation into OnStar's revised terms and conditions, which some liked to Big Brother, the fictitious, all-seeing dictator in George Orwell's dystopian novel 1984.

"We realize that our proposed amendments did not satisfy our subscribers," OnStar President Linda Marshall said in a prepared statement announcing the hasty retreat. "This is why we are leaving the decision in our customers' hands. We listened, we responded and we hope to maintain the trust of our more than 6 million customers."

What kicked off the brouhaha was a seemingly modest revision to the OnStar customer guidelines which revealed the company would maintain the cellular data link installed in any vehicle subscribed to the OnStar service, "unless they (customers) ask us not to do so," confirmed Joanne Finnorn, vice president of subscriber services.

Finnorn said that by maintaining the data link OnStar would have "the capability to alert vehicle occupants about severe weather conditions such as tornado warnings or mandatory evacuations. Another benefit for keeping this connection 'open' could be to provide vehicle owners with any updated warranty data or recall issues."

But such assertions - along with an apology for creating "confusion" - failed to satisfy the company's critics - who also included Sens. Al Franken, of Minnesota, and Chris Coons, D-Del.

Part of the problem was that OnStar also reserved the right to not only track customer driving patterns - including miles driven, routes, vehicle speed and even whether occupants wore seatbelts - but to sell that information to third parties that could include marketers, along with government and police agencies. It didn't help much when OnStar insisted it would aggregate such personal information and not provide identifying details.

Following OnStar's Tuesday announcement, Coons and Franken jointly called it "the right thing to do." But the move might not satisfy all critics. Company spokesman Stefan Cross told that while OnStar so far has "not sold data to any third parties" it has not given up that right or option for active subscribers.

OnStar is the largest brand in the fast-growing field of telematics, offering a package of safety features that can perform functions like alerting authorities of serious accidents and allowing a motorist to remotely unlock a door if the keys are locked inside.

Most automakers now offer, or are planning to add, telematics services. Most versions, such as Ford's Sync, rely on customers to "pair" the vehicle's onboard technology with a smartphone to access services stored in the so-called "cloud." But OnStar has its own direct, onboard data and voice link that allows it to track vehicle information even when the customer isn't clued in.

It's too early to tell whether the privacy flap will hurt OnStar, although comments popping up on Twitter and Facebook suggest the Big Brother image is not playing well in the public eye.

"I'm thinking this will make me learn more toward Dodge next time," posted Detroit writer Phil Foley.

This isn't the first time the brave new world of in-car communications has triggered concerns about safety and security. There has been much written about the dangers of texting while driving, of course - and many laws now ban the practice. But there's also growing concern about potential abuses of privacy.

Several organizations have shown it possible to hack into a vehicle's onboard electronics remotely to access personal information - and even to operate vehicle functions, such as unlocking doors or starting the engine without a key.

Freelance security blogger Casey Halverson wrote a June 14 report in Computer World magazine revealing that the Carwings system on the new Nissan Leaf left "wide open" data about the vehicle and how it was being driven that could be readily tapped by a provider of RSS news feeds. Potentially, authorities could access that data to see if the vehicle was driven over the speed limit, while marketers could learn if a motorist were approaching a mall and then direct targeted ads at the vehicle.

While many Americans fret over such possible invasions of privacy others seem to be welcome the opportunity to offer up personal data for financial benefit.

State Farm is the latest in a growing list of insurance companies offering discounts on automotive coverage to those willing to install a small device that will monitor driving behavior.

Developed in a partnership with Hughes Telematics, the In-Drive service offers an additional twist: several OnStar-like services, such as automatic emergency response after an accident.

There's a monthly charge of $14.99 after a six-month free trial, but In-Drive subscribers will also save about 10 percent - and possibly as much as 50 percent, State Farm says - if they're recorded showing safe driving behavior. The company does not say whether "bad" drivers would be penalized.

A Connecticut car rental firm tried to punish customers who exceeded the speed limit several years ago by using a hidden GPS-based tracking system. The courts eventually ruled against the American Rental company's practice.